Confidence of Manufacturing Companies Declines According to IPA SBRB Study

Small and medium-sized manufacturers are slightly less confident for their business prospects over the course of the next 12 months, according to the results of an International Profit Associates Small Business Research Board (IPA SBRB) survey.

The IPA SBRB Manufacturing Confidence Index fell to 43.2, a drop of 1.8 points from the index of 45 reported in August. The 43.2, however, is higher than the IPA Small Business Confidence Index (IPA SBCI) of 42.7 recorded in the latest national survey of "all" business owners and managers.

The top concerns of manufacturers, in order of importance, were:

the cost of materials

health care costs

taxes

government regulation

energy and fuel costs

The IPA SBRB has been tracking the attitudes of small businesses since July 2004. This is the second consecutive quarter that results for the manufacturing sector have been reported. The key ingredients for determining the confidence index are attitudes about the direction of the economy, revenue predictions and hiring plans.

Other findings included:

Manufacturers are projecting revenues to increase over the next 12 months, with nearly 60% indicating that sales will be higher (compared to 50% during the most previous reporting period). Of that group, slightly more than 43% said they believe revenues over the next 12 months will be more than 10% higher than the current levels.

Hiring expectations have waned since late summer. Less than 30% believe they will be adding employees over the next 12 months, as opposed to the last poll when 38% said they intended to add to their staffing. About 53% said staff levels will remain the same and 7% said they expect staffing decreases.

Concern about the economy also impacted the confidence index. Where nearly half of the manufacturers responded to the previous poll indicated that they are forecasting improvement in the economy over the next 12 months, less than 41% believe the economy is improving.

The study found that the most important priorities for manufacturing companies in 2007, in order of importance, were:

Increase revenue

Reduce expenses

Improve productivity

Upgrade facilities

"The forecast for increased revenues would ordinarily accompany projections for increased hiring. That is not the case here. It seems evident that there is going to be significant pressure on maintaining cost control and boosting productivity in order to meet profit goals," said Gregg Steinberg, President of International Profit Associates.